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Benchmarking, Social Partnership and Higher Remuneration: Wage Settling Institutions and the Public-Private Sector Wage Gap in Ireland

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Author Info

  • Kelly, Elish

    (ESRI)

  • McGuinness, Seamus

    (ESRI)

  • O'Connell, Philip J.

    (ESRI)

Abstract

This paper uses data from the 2003 and 2006 National Employment Surveys to analyse the public-private sector wage gap in Ireland. In particular, we investigate the impact of awards implemented under a number of wage setting institutions on the pay differential. These include the pay increases awarded by the Public Service Benchmarking Body in its first report and the increases given to higher-level posts in the public sector by the Review Body on Higher Remuneration in the Public Sector, Reports No. 40 and 41. The pay increases that were awarded under the Social Partnership process in Sustaining Progress and the Mid-term Review of Part Two of Sustaining Progress are also captured in the data used. The results indicate that the public sector pay premium increased dramatically from 7.7 to 23.5 per cent between 2003 and 2006. Furthermore, we found that by 2006 senior public service workers earned approximately 10 per cent more than their private sector counterparts, while those in lower-level grades earned between 24 and 32 per cent more. The public premium results derived in this paper relating to March 2006 predate the payment of the two most recent Social Partnership wage deals, along with the pay increases awarded in the second Benchmarking exercise and by the Review Body on Higher Remuneration in Reports No. 42 and 43. The results presented raise serious questions with respect to the justification for any further boosts to the pay levels of public sector workers.

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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP270.

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Length: 30 pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:esr:wpaper:wp270

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Keywords: Employer-Employee Linked Data/Ireland/Public-Private Sector Pay Gap/Wage Setting Institutions;

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References

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  1. Javier Gardeazabal & Aratza Ugidos, . "More on identification in detailed wage decompositions," Studies on the Spanish Economy 140, FEDEA.
  2. O'Connell, Philip J. & Russell, Helen, 2006. "Does it Pay to Go Public? Public/Private Wage Differences among Recent Graduates in Ireland," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2006(3-Autumn), pages 64-79.
  3. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  4. Lucifora, Claudio & Meurs, Dominique, 2004. "The Public Sector Pay Gap in France, Great Britain and Italy," IZA Discussion Papers 1041, Institute for the Study of Labor (IZA).
  5. Boyle, Gerry & McElligott, Rory & O'Leary, Jim, 2004. "Public-Private Wage Differentials in Ireland, 1994-2001," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2004(2-Summer), pages 1-23.
  6. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
  7. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
  8. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  10. Richard Disney & Amanda Gosling, 1998. "Does it pay to work in the public sector?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 347-374, November.
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  12. Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August.
  13. Gerry Boyle & Rory McElligott & Jim O'Leary, 2004. "Public-Private Wage Differentials in Ireland, 1994-2001," Economics, Finance and Accounting Department Working Paper Series n1421004, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  14. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI).
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Citations

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Cited by:
  1. Callan, Tim & Nolan, Brian & Walsh, John R., 2010. "The Economic Crisis, Public Sector Pay, and the Income Distribution," Papers WP344, Economic and Social Research Institute (ESRI).
  2. Brian Nolan & Bertrand Maitre & Sarah Voitchovsky & Christopher Whelan, 2012. "GINI DP 70: Inequality and Poverty in Boom and Bust: Ireland as a Case Study," GINI Discussion Papers 70, AIAS, Amsterdam Institute for Advanced Labour Studies.
  3. Sarah Voitchovsky & Bertrand Maitre & Brian Nolan, 2012. "Wage Inequality in Ireland’s “Celtic Tiger” Boom," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 99–133.
  4. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2013. "Comparing Public and Private Sector Pay in Ireland: Size Matters," Research Notes RN2012/4/2, Economic and Social Research Institute (ESRI).
  5. repec:esr:chaptr:jacb200962 is not listed on IDEAS
  6. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2009. "The Public-Private Sector Pay Gap in Ireland: What Lies Beneath?," Papers WP321, Economic and Social Research Institute (ESRI).
  7. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
  8. Karl Whelan, 2009. "Policy Lessons from Ireland’s Latest Depression," Working Papers 200914, School Of Economics, University College Dublin.
  9. Lane, Philip R., 2009. "A New Fiscal Strategy for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(2), pages 233–253.
  10. Niamh Hardiman & Muiris MacCarthaigh, 2013. "How Governments Retrench In Crisis: The Case of Ireland," Working Papers 201315, Geary Institute, University College Dublin.
  11. Sebastian Dellepiane Avellaneda & Niamh Hardiman, 2010. "The European Context of Ireland’s Economic Crisis," The Economic and Social Review, Economic and Social Studies, vol. 41(4), pages 473–500.
  12. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2009. "Recovery Scenarios for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS007.
  13. repec:esr:wpaper:rn2012/4/2 is not listed on IDEAS
  14. Honohan, Patrick & Donovan, Donal & Gorecki, Paul & Mottiar, Rafique, 2010. "The Irish Banking Crisis: Regulatory and Financial Stability Policy," MPRA Paper 24896, University Library of Munich, Germany.
  15. Sebastian Dellepiane & Niamh Hardiman, 2011. "Governing the Irish Economy: A Triple Crisis," Working Papers 201103, Geary Institute, University College Dublin.
  16. Niamh Hardiman, 2013. "Rethinking the political economy of fiscal consolidation in two recessions in Ireland," Working Papers 201316, Geary Institute, University College Dublin.
  17. McGinnity F & Russell H, 2011. "Workplace Equality in the Recession? The Incidence and Impact of Equality Policies and Flexible Working," Research Series, Economic and Social Research Institute (ESRI), number 200.
  18. Gorecki, Paul K., 2009. "The Recession, Budgets, Competition, and Regulation: Should the State Supply Bespoke Protection?," Papers BP2010/2, Economic and Social Research Institute (ESRI).

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